The engine which is China is misfiring and China’s commodity suppliers across the globe are feeling the pain. This contributes to geopolitical instability which in turn can further impact economic instability, which can eventually impact your household stability.
Once the dominoes start falling they are hard to stop.
Kazakhstan is a good example of why emerging markets are hurting right now: its biggest exports are oil and copper, and weakening demand from China, its biggest trading partner, is driving those commodities to multi-year lows (crude oil futures fell as low as $40.52 a barrel overnight–their lowest level since early 2009). Most of the rest of Kazakhstan’s economy is dependent on neighboring Russia, and that’s not a great idea either these days: the ruble, another petrocurrency, is back within sight of a 17-year low against the greenback after the Russian economy shrunk 3.4% in the first half of the year. It was the plummeting ruble, more than anything else, that tipped the Kazakh domino over.
But the tenge was far from alone in its misery Thursday: South Africa’s rand fell to its lowest level against the dollar since 2001; and the Turkish lira fell to a new record low against the dollar as it extended its losing streak to six straight days. Turkey’s economy is suffering from being a neighbor of Syria and Iraq, and is now seeing the multi-vector wars in the region increasingly spill over onto its territory.